Egg Industry Leader Sees More Room for Hens

5/21/2011 10:00 AM
By Dick Wanner, Reporter

LANCASTER, Pa. — Paul Sauder, president of R.W. Sauder Inc., producer of Sauder’s Eggs, talked about the past, present and future of the egg business at last week’s Ag Issues Forum, a monthly breakfast meeting hosted by the Lancaster Chamber of Commerce and Industry at the Lancaster Farm and Home Center.

Much of Sauder’s talk about the present centered on the industry’s response to animal welfare issues. Animal welfare activists have prompted a radical change in the way laying hens are housed, but in Sauder’s view, the industry is adapting successfully to the challenge.

A growing number of egg producers are embracing enriched colony cages which, according to Sauder, give laying hens room to roam, perch, scratch, lay their eggs in a dark place and stretch their wings. The move to enriched colony cages —which replace battery cages — began with pressure from animal welfare groups, the Humane Society of the United States (HSUS) chief among them.

Battery cages, when they came into widespread use in the 1950s, were a boon to both the industry and the birds. Prior to cages, hens lived in houses on manure-covered, rodent-infested floors. Putting them in cages — two to a cage — got them off the floor, away from the manure and vermin. The chickens needed fewer antibiotics, and they produced more eggs.

Two hens in a cage was good, but three hens produced more eggs. Then the industry went to four hens in a cage, then five, six, seven, until birds lived their entire lives in a space of just 43 square inches, less area than a letter-size sheet of paper folded in half.

“The industry was focused on economics,” Sauder told the group, “but we forgot about animal welfare, and the fact that we were not treating those animals humanely at 43 square inches per bird.”

Enriched colony cages, which have 144 square inches per bird, are swiftly replacing battery cages in Europe. Statewide voter referendums in the U.S., resulting largely from HSUS campaigns, are gradually forcing egg producers to move away from battery cages in this country. Sauder said he expects in the near future there will be no battery cages.

If the HSUS agenda were fully implemented, there would be no cages at all. That, Sauder said, would present a real challenge to the egg market.

“We produce 77 billion eggs a year in the U.S.,” he told the group. “Producing those eggs in enriched colony cages will cost us about 20 cents a dozen more. Going entirely cage-free would cost an extra dollar a dozen.”

HSUS operates in several arenas in its animal welfare efforts. The organization has persuaded the IHOP restaurant chain to use only eggs from cage-free flocks, Sauder said.

Hellman’s uses cage-free eggs in its light mayonnaise, and its company website says it will go to cage-free in its other products. Proctor and Gamble demands cage-free for some of its products, and Walmart’s house brand, Great Value, incorporates only cage-free eggs.

Concern for chickens wasn’t the motivating factor for these food industry giants, according to Sauder.

“Eggs are a minor ingredient for these companies,” he said. “It is easier for them to go along with HSUS than to deal with the negative publicity they would have to put up with.”

Sauder said the HSUS has organized animal welfare ballot initiatives in 29 states, and it looks like the group is aiming to pick off the egg industry state by state.

Rather than fight the group in a continuing round of skirmishes, Sauder said United Egg Producers, the industry’s most prominent national advocate, had voted two days earlier to organize a committee to work with HSUS.

The goal of the egg producers would be national legislation or regulations on the size and construction of enriched colony cages. That approach, Sauder said, would blunt any HSUS efforts to impose cage-free housing for the nation’s entire laying flock.

While animal welfare is perhaps the most visible detail in the egg industry story, Sauder, in response to a question from one of his listeners, said the biggest change in his business is in the way eggs are handled.

Sauder’s Eggs had its beginnings in the 1930s when Frank Sauder, Sauder’s grandfather, loaded up a truck several times a week with eggs, poultry and vegetables, and drove to Philadelphia to sell his wares door to door, and to restaurants and small markets. When Sauder’s father, Raymond, took over the business, he started dealing with retail outlets.

One of those was Acme Markets, who had been picking up eggs from local farmers and hauling them to Philadelphia for processing. Raymond offered to process the eggs for Acme, and the Sauder business expanded. The business grew again in the 1970s, when fuel prices soared and southern egg producers could no longer afford to compete with producers in the Northeast, who were much closer to major markets.

In those early years, Sauder’s worked with 400 producers, and the company processed 3,000 cases a week. Today, there are 80 farms producing for Sauder’s, and they supply 85,000 to 90,000 cases a week.

In the ’70s, there were basket washers, hand candlers, hand packers and a labor force of dozens processing 600 cases a day. Computerized equipment soon to be installed at the Sauder’s plant in Lititz, Pa., will completely process and pack 500 cases an hour with a labor force of eight people.

One key to the company’s success, Sauder said, has been the independent producer that the company depends on.

“We’ve been told that vertical integrators are going to put us out of business, but we have a definite advantage,” Sauder said. “When somebody’s on a payroll, and he feels like knocking off for a day, or going in late, he can do it. When an independent producer — a guy who’s got skin in the game — has a problem, he doesn’t quit when his shift is done. He gets paid by the number of eggs he produces. That’s a powerful incentive.”